Department store Liberty has bucked the downbeat mood after a return to its roots as a luxury goods merchant helped boost sales by 12 per cent.

Shares soared 11 per cent as it said sales at the Regent Street outlet in London rose to £23.7 million in the six months to December 31 - bucking the tough trading conditions suffered by many other retailers.

Owner Retail Stores said its refocus on items such as luxury furniture and fabrics had helped it narrow operating losses, although at the bottom line the firm fell deeper into the red.

The momentum continued into the new financial year with sales in February and March showing a "healthy increase" over the previous year.

Under the leadership of chief executive Iain Renwick, Liberty has undergone a restructuring including the refurbishment of its home department which emphasises its historic focus on designer furniture.

Chairman Richard Balfour-Lynn said: "It is pleasing to see that Liberty continues to drive sales growth, as it is restored as a luxury goods emporium."

Areas that did particularly well during the half year included ladies' accessories, jewellery and clothing and refurbished home departments.

Operating losses before tax and interest narrowed to £550,000 from a deficit of £754,000 last time.

Increased interest charges meant pre-tax losses widened to £2.3 million from £2 million. Retail Stores said its previously announced plan to sell two key properties would allow it to pay off debt and reduce these charges.

It said there had been strong interest in Regent House and in its office building Lasenby House.

Retail Stores also announced plans to change its name to Liberty, subject to shareholder approval.

Analyst Rhys Williams at Seymour Pierce described the update as "pleasing", yet said the shine was taken away by the high interest charge.

As a result of this, the broker changed its forecast for full year losses to £5.5 million, from £5.2 million.